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Defaqto: What is behind the evolution of managed portfolio services?

Technology update for Financial Advisers and Paraplanners

8 Feb 2019

Defaqto: What is behind the evolution of managed portfolio services?

The evolution of MPS has been somewhat rapid, particularly over the past few years.

This article was originally published on FTAdviser.com, on 09 January 2019.

David Boyle, Researcher (Funds & DFM)

Whether the solutions in this increasingly crowded market can all survive remains to be seen, but the signs are positive as assets under management are increasing across the board.

Defaqto has adopted managed portfolio services (MPS) as the preferred terminology for a portfolio of segregated holdings where all clients in a particular profile receive exactly the same portfolios and, crucially, are traded and adjusted, with a discretionary agreement in place, by the discretionary managers.

The evolution of MPS has been quickening, particularly over the past few years, and Defaqto has witnessed this as it has been collecting data on these solutions for the best part of a decade now.

Key to this evolution has been a shift in thinking from both advisers and discretionary fund managers (DFMs).

The days when MPS were seen as solutions for ‘mopping up’ clients with small pots to invest are largely a thing of the past, although some DFMs still offer solutions with very low investment thresholds, particularly when accessed through a platform.

Nowadays an MPS tends to represent a discretionary manager’s best thinking and they are viable investment solutions for clients with varying degrees of complexity and at most investment levels.  

At the time of writing, Defaqto holds comprehensive asset allocation and quarterly performance data on some 1,500 portfolios across 142 MPS solutions and from 64 discretionary managers.

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